Fool's Gold in Alaska

Amory B. Lovins, a physicist, and L. Hunter Lovins, a lawyer and political scientist, founded and lead Rocky Mountain Institute, a market-oriented, nonpartisan, nonprofit applied-research center in Snowmass, Colorado. They are long-time consultants to major oil companies and have advised the Department of Defense on energy security.

Oil prices have fluctuated randomly for well over a century. Heedless of this fact, oil's promoters are always offering opportunities that could make money -- but on the flawed assumption that high prices will prevail. Leading the field of these optimists are Alaskan politicians. Eager to keep funding their state's de facto negative income tax -- oil provides 80 percent of the state's unrestricted general revenue -- they have used every major rise in oil prices since 1973 to advocate drilling beneath federal lands on the coastal plain of the Arctic National Wildlife Refuge. Just as predictably, environmentalists counter that the refuge is the crown jewel of the American wilderness and home to the threatened indigenous Gwich'in people. As some see it, drilling could raise human rights issues under international law. Canada, which shares threatened wildlife, also opposes drilling.

Both sides of this debate have largely overlooked the central question: Does drilling for oil in the refuge's coastal plain make sense for economic and security reasons? After all, three imperatives should shape a national energy policy: economic vitality, secure supplies, and environmental quality. To merit serious consideration, a proposal must meet at least one of these goals.

Drilling proponents claim that prospecting for refuge oil will enhance the first two while not unduly harming the third. In fact, not only does refuge oil fail to meet any of the three goals, it could even compromise the first two. First, the refuge is unlikely to hold economically recoverable oil. And even if it did, exploitation would only briefly reduce U.S. dependence on imported oil by just a few percentage points, starting in about a decade. Nor would the refuge yield significant natural gas. Despite some recent statements by the Bush administration, the North Slope's important natural-gas deposits are almost entirely outside the refuge. The gas-rich areas are already open to industry, and environmentalists would likely support a gas pipeline there, but its high cost -- an estimated $10 billion -- would make it seem uneconomical.

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